Demand Response as an Alternative to Generation

An alternative to some generation, especially to peaking units, is to develop mechanisms for end-use demand reduction during peak times. Such programs are often called demand response. Demand response can be emergency demand response (where customers are required to reduce demand only during times when their failure to do so will create reliability issues) or economic demand response (where customers are given economic incentives to reduce demand during times when it is cheaper to reduce demand than to purchase or generate additional units of electric supply). In the 1980's utilities implemented demand programs, typically called demand side management or DSM, whose goal was to reduce the need for costly new generation construction. These programs encouraged customers to implement energy efficiency measures through rebates for more efficient appliances and offered incentives such as discounted curtailable rate schedules which allow the utility to curtail service during times when high demand threatens system reliability. Although many of these programs still exist, there has been a trend lately towards economic demand response (EDR)programs. EDR recognizes that demand response to high prices can have a significant impact on muting price spikes in competitive markets. Thus, utilities and retail marketers have an interest in creating means by which customers can be compensated for reducing demand during high price times-even when reliability is not a factor. Traditional rates that do not pass real-time price signals to customers fail to incite this behavior. EDR programs include:

Real-time pricing--Customers pay hourly prices that reflect same-day or day-ahead
market conditions.

Voluntary load response--Customers are offered a payment for curtailing blocks of load, usually in the day-ahead.

Curtailable capacity call--Customers are paid a capacity payment to give the utility or marketer the right to curtail blocks of load under certain conditions; failure to curtail results in payment of market rates for that block of load.

Automatic load response--Customers are paid a capacity payment to give the utility or marketer the right to remotely and automatically curtail blocks of load.

It is expected that as more competitive markets evolve, economic demand response will become an increasingly common option for meeting peak power requirements.

Electric Generation, Global Warming and the Kyoto Protocol

The world's scientific community (in stark contrast to some of the world's political community) now generally agrees that man's activities in burning carbon-based fuels (coal, petroleum and natural gas) is resulting in raised concentrations of greenhouse gasses which increase the earth's average temperature and destabilize weather patterns. If the trend continues, results could be severe and include melting of ice packs, flooding of low lying areas, interruption of food production, and increased incidents of severe weather.

The largest single greenhouse gas is carbon dioxide (CO2). About 40% of the CO2 emitted in the United States (which is responsible for about one-quarter of the world's CO2) is the result of electric power production. More of this if from coal generation than any other source (coal generation emits about twice as much CO2 per unit of output than natural gas generation). Control technologies for CO2 emissions from traditional power plants are not currently available.

In December 1997 a number of countries agreed to the Kyoto Protocol-a historic agreement that is designed to reduce greenhouse gas emissions by establishing national emissions limits and provide for global trading in greenhouse gas emissions credits. The major industrial powers of the EU, the United States and Japan agreed to cut emissions by 8%, 7%, and 6% respectively below 1990 levels over a five-year period beginning 2008 and to create a global emissions credit trading program. As with all treaties, the Kyoto Protocol requires ratification by each signatory country. In the United States, the Senate is required to ratify treaties. After the Presidential election in 2000, the Bush Administration announced that it would not support the Kyoto Protocol and has never requested that the Senate ratify it. The Kyoto Protocol as ratified by the majority of European countries, Japan and Canada, and went into effect in February 2005. The participating countries are now moving forward with implementation of greenhouse gas caps and international trading of greenhouse emissions credits.

Meanwhile in the U.S., a number of states are have moved forward with regulation of greenhouse gases, and federal regulation will be implemented in the near future.

UPDATE:
EPA has extended the deadline for reporting 2010 GHG data to September 30, 2011. This extension will allow EPA to further test the system that reporters will use to submit data, and give industry the opportunity to test the tool, provide feedback and have sufficient time to become familiar with it prior to reporting.

In response to the FY2008 Consolidated Appropriations Act (H.R. 2764; Public Law 110–161), EPA issued the Mandatory Reporting of Greenhouse Gases Rule (74 FR 5620) which requires reporting of greenhouse gas (GHG) data and other relevant information from large sources and suppliers in the United States. The purpose of the rule is to collect accurate and timely GHG data to inform future policy decisions. In general, the Rule is referred to as 40 CFR Part 98 (Part 98) 1. Implementation of Part 98 is referred to as the Greenhouse Gas Reporting Program (GHGRP).

Suppliers of certain products that would result in GHG emissions if released, combusted or oxidized; direct emitting source categories; and facilities that inject CO2 underground for geologic sequestration or any purpose other than geologic sequestration, are covered in Part 98. Facilities that emit 25,000 metric tons or more per year of GHGs are required to submit annual reports to EPA. Part 98 was published in the Federal Register (www.regulations.gov) on October 30, 2009 under Docket ID No. EPA-HQ-OAR-2008-0508-2278.

In the IEO2010 Reference case, which does not include prospective legislation or policies, world marketed energy consumption grows by 49 percent from 2007 to 2035. Total world energy use rises from 495 quadrillion British thermal units (Btu) in 2007 to 590 quadrillion Btu in 2020 and 739 quadrillion Btu in 2035.

The global economic recession that began in 2008 and continued into 2009 has had a profound impact on world energy demand in the near term. Total world marketed energy consumption contracted by 1.2 percent in 2008 and by an estimated 2.2 percent in 2009, as manufacturing and consumer demand for goods and services declined. Although the recession appears to have ended, the pace of recovery has been uneven so far, with China and India leading and Japan and the European Union member countries lagging. In the Reference case, as the economic situation improves, most nations return to the economic growth paths that were anticipated before the recession began.

The most rapid growth in energy demand from 2007 to 2035 occurs in nations outside the Organization for Economic Cooperation and Development1 (non-OECD nations). Total non-OECD energy consumption increases by 84 percent in the Reference case, compared with a 14-percent increase in energy use among OECD countries. Strong long-term growth in gross domestic product (GDP) in the emerging economies of non-OECD countries drives the fast-paced growth in energy demand. In all non-OECD regions combined, economic activity—as measured by GDP in purchasing power parity terms—increases by 4.4 percent per year on average, compared with an average of 2.0 percent per year for OECD countries.

The IEO2010 Reference case projects increased world consumption of marketed energy from all fuel sources over the 2007-2035 projection period. Fossil fuels are expected to continue supplying much of the energy used worldwide. Although liquid fuels remain the largest source of energy, the liquids share of world marketed energy consumption falls from 35 percent in 2007 to 30 percent in 2035, as projected high world oil prices lead many energy users to switch away from liquid fuels when feasible. In the Reference case, the use of liquids grows modestly or declines in all end-use sectors except transportation, where in the absence of significant technological advances liquids continue to provide much of the energy consumed.

Average oil prices2 increased strongly from 2003 to mid-July 2008, when prices collapsed as a result of concerns about the deepening recession. In 2009, oil prices trended upward throughout the year, from about $42 per barrel in January to $74 per barrel in December. Oil prices have been especially sensitive to demand expectations, with producers, consumers, and traders continually looking for an indication of possible recovery in world economic growth and a likely corresponding increase in oil demand. On the supply side, OPEC’s above-average compliance to agreed-upon production targets increased the group’s spare capacity to roughly 5 million barrels per day in 2009. Further, many of the non-OPEC projects that were delayed during the price slump in the second half of 2008 have not yet been revived.

After 2 years of declining demand, world liquids consumption is expected to increase in 2010 and strengthen thereafter as the world economies recover fully from the effects of the recession. In the IEO2010 Reference case, the price of light sweet crude oil in the United States (in real 2008 dollars) rises from $79 per barrel in 2010 to $108 per barrel in 2020 and $133 per barrel in 2035.

print version World marketed energy consumption increases by 49 percent from 2007 to 2035 in the Reference case. Total energy demand in non-OECD countries increases by 84 percent, compared with an increase of 14 percent in OECD countries. In the IEO2010 Reference case, which does not include prospective legislation or policies, world marketed energy consumption grows by 49 percent from 2007 to 2035. Total world energy use rises from 495 quadrillion British thermal units (Btu) in 2007 to 590 quadrillion Btu in 2020 and 739 quadrillion Btu in 2035 (Figure 1). Chart data The global economic recession that began in 2008 and continued into 2009 has had a profound impact on world energy demand in the near term. Total world marketed energy consumption contracted by 1.2 percent in 2008 and by an estimated 2.2 percent in 2009, as manufacturing and consumer demand for goods and services declined. Although the recession appears to have ended, the pace of recovery has been uneven so far, with China and India leading and Japan and the European Union member countries lagging. In the Reference case, as the economic situation improves, most nations return to the economic growth paths that were anticipated before the recession began. The most rapid growth in energy demand from 2007 to 2035 occurs in nations outside the Organization for Economic Cooperation and Development1 (non-OECD nations). Total non-OECD energy consumption increases by 84 percent in the Reference case, compared with a 14-percent increase in energy use among OECD countries. Strong long-term growth in gross domestic product (GDP) in the emerging economies of non-OECD countries drives the fast-paced growth in energy demand. In all non-OECD regions combined, economic activity—as measured by GDP in purchasing power parity terms—increases by 4.4 percent per year on average, compared with an average of 2.0 percent per year for OECD countries. The IEO2010 Reference case projects increased world consumption of marketed energy from all fuel sources over the 2007-2035 projection period (Figure 2). Fossil fuels are expected to continue supplying much of the energy used worldwide. Although liquid fuels remain the largest source of energy, the liquids share of world marketed energy consumption falls from 35 percent in 2007 to 30 percent in 2035, as projected high world oil prices lead many energy users to switch away from liquid fuels when feasible. In the Reference case, the use of liquids grows modestly or declines in all end-use sectors except transportation, where in the absence of significant technological advances liquids continue to provide much of the energy consumed. Chart data Average oil prices2 increased strongly from 2003 to mid-July 2008, when prices collapsed as a result of concerns about the deepening recession. In 2009, oil prices trended upward throughout the year, from about $42 per barrel in January to $74 per barrel in December. Oil prices have been especially sensitive to demand expectations, with producers, consumers, and traders continually looking for an indication of possible recovery in world economic growth and a likely corresponding increase in oil demand. On the supply side, OPEC’s above-average compliance to agreed-upon production targets increased the group’s spare capacity to roughly 5 million barrels per day in 2009. Further, many of the non-OPEC projects that were delayed during the price slump in the second half of 2008 have not yet been revived. After 2 years of declining demand, world liquids consumption is expected to increase in 2010 and strengthen thereafter as the world economies recover fully from the effects of the recession. In the IEO2010 Reference case, the price of light sweet crude oil in the United States (in real 2008 dollars) rises from $79 per barrel in 2010 to $108 per barrel in 2020 and $133 per barrel in 2035. World energy markets by fuel type Source: EIA/DOE

Most of the electricity in the United States is produced using steam turbines.

A turbine converts the kinetic energy of a moving fluid (liquid or gas) to mechanical energy. In a steam turbine, steam is forced against a series of blades mounted on a shaft, thus rotating the shaft connected to the generator. The generator, in turn, converts its mechanical energy to electrical energy based on the relationship between magnetism and electricity.

In steam turbines powered by fossil fuels, such as coal, petroleum (oil), and natural gas, the fuel is burned in a furnace to heat water in a boiler to produce steam.

Fossil Fuels Generate Most U.S. Power

Coal is the most common fuel for generating electricity in the United States. In 2009, 45% of the Country's nearly 4 trillion kilowatthours of electricity used coal as its source of energy.

Fossil Fuels Generate Most U.S. Power

Coal is the most common fuel for generating electricity in the United States. In 2009, 45% of the Country's nearly 4 trillion kilowatthours of electricity used coal as its source of energy.

Click to enlarge »

Natural gas, in addition to being burned to heat water for steam, can also be burned to produce hot combustion gases that pass directly through a turbine, spinning the turbine's blades to generate electricity. Gas turbines are commonly used when electricity utility usage is in high demand. In 2009, 23% of the Nation's electricity was fueled by natural gas.

Petroleum can be burned to produce hot combustion gases to turn a turbine or to make steam to turn a turbine. Residual fuel oil, a product refined from crude oil, is often the petroleum product used in electric plants that use petroleum to make steam. Petroleum was used to generate just over 1% of all electricity in the United States in 2009.

Nuclear Power Provides About One-Fifth of U.S. Electricity

Nuclear power is a method in which steam is produced by heating water through a process called nuclear fission. In a nuclear power plant, a reactor contains a core of nuclear fuel, primarily uranium. When atoms of uranium fuel are hit by neutrons, they fission (split) releasing heat and more neutrons. Under controlled conditions, these other neutrons can strike more uranium atoms, splitting more atoms, and so on. Thereby, continuous fission can take place, creating a chain reaction releasing heat. The heat is used to turn water into steam, that, in turn, spins a turbine that generates electricity. Nuclear power was used to generate about 20% of all the Country's electricity in 2009.

Renewable Energy Sources Make Up the Rest

Hydropower, the source for 7% of U.S. electricity generation in 2009, is a process in which flowing water is used to spin a turbine connected to a generator. There are two basic types of hydroelectric systems that produce electricity. In the first system, flowing water accumulates in reservoirs created by dams. The water falls through a pipe called a penstock and applies pressure against the turbine blades to drive the generator to produce electricity.

In the second system, called run-of-river, water is diverted from a river using a relatively low dam or weir into penstocks and turbines. The dam does not store a large volume of water in a reservoir. Run-of-river power plants are more dependent on river flows than hydro plants with reservoirs for storing water which can produce electricity even when natural river flows are low.

Biomass is material derived from plants or animals (i.e. biogenic) and includes lumber and paper mill wastes; food scraps, grass, leaves, paper, and wood in municipal solid waste (garbage); and forestry and agricultural residues such as wood chips, corn cobs, and wheat straw. These materials can be burned directly in steam-electric power plants, or converted to gas that can be burned in steam generators, gas turbines, or internal combustion engine-generators. Biomass accounts for about 1% of the electricity generated in the United States.

Wind power is produced by converting wind energy into electricity. Electricity generation from wind has increased significantly in the United States since 1970, but wind power remains a small fraction of U.S. electricity generation, about 1%.

Geothermal power comes from heat energy buried beneath the surface of the earth. In some areas of the United States, enough heat rises close to the surface of the earth to heat underground water into steam, which can be tapped for use at steam-turbine plants. This energy source generated less than 1% of the electricity in the Country in 2009.

Solar power is derived from energy from the sun. There are two main types of technologies for converting solar energy to electricity: photovoltaic (PV) and solar-thermal electric. PV conversion produces electricity directly from sunlight in a photovoltaic (solar) cell. Solar-thermal electric generators concentrate solar energy to heat a fluid and produce steam to drive turbines. In 2009, less than 1% of the Nation's electricity was from solar power.

SOURCE:

http://www.eia.doe.gov/energyexplained/index.cfm?page=electricity_in_the_united_states

EXERCISE YOUR POWER TO CHOOSE:
Competition is back. Learn how your business can benefit.
Beginning in 2010, more California businesses can benefit from the lower costs and innovative products that electric competition brings to the market through Direct Access. Choose your Electric Service Provider (ESP) wisely.

History of California Direct Access:
Retail electric choice was first introduced in 1998 when California passed a bill allowing all customers to participate in Direct Access (DA). Under DA, customers were no longer obligated to purchase energy supply solely from local utilities - they had the power to compare offers from many ESP's. In September 2001, the California Public Utility Commission suspended Direct Access and businesses, with the exception of commercial and industrial customers with existing supplier contracts, were only able to purchase energy from their local utility.

Direct Access Returns to California:
With the 2009 passage of Bill 695, all California businesses can once again participate in the competitive retail electricity market. Switching to an ESP can save your business money and help you manage your cash flow. The number of customers who can qualify for California Direct Access is limited and determined on a first-come, first-serve basis. New load will become eligible for DA every year between 2010 and 2013 through annual Enrollment Windows, but the new load is still relatively small and in high demand. Businesses that want to take advantage of DA must act as soon as possible to guarantee their power to choose.